U.S. TREAS Form treas-irs-6781-2002
Form
6781
OMB No. 1545-0644
Gains and Losses From Section 1256
Contracts and Straddles
䊳
Department of the Treasury
Internal Revenue Service
2002
Attachment
Sequence No.
Attach to your tax return.
Check all applicable boxes (see instructions). A
Mixed straddle election
B
Part I
82
Identifying number
Name(s) shown on tax return
Straddle-by-straddle identification election
C
D
Mixed straddle account election
Net section 1256 contracts loss election
Section 1256 Contracts Marked to Market
(a) Identification of account
(b) (Loss)
(c) Gain
1
)
2 (
Add the amounts on line 1 in columns (b) and (c)
3
Net gain or (loss). Combine line 2, columns (b) and (c)
4
Form 1099-B adjustments. See instructions and attach schedule
5
Combine lines 3 and 4
Note: If line 5 shows a net gain, skip line 6 and enter the gain on line 7. Partnerships and
S corporations, see instructions.
6 If you have a net section 1256 contracts loss and you checked box D above, enter the amount
6
of that loss to be carried back, as a positive number
7
7 Combine lines 5 and 6
8 Short-term capital gain or (loss). Multiply line 7 by 40% (.40). Enter here and include on the
8
appropriate line of Schedule D (see instructions)
9 Long-term capital gain or (loss). Multiply line 7 by 60% (.60). Enter here and include on the
9
appropriate line of Schedule D (see instructions)
Gains and Losses From Straddles. Attach a separate schedule listing each straddle and its components.
Part II
2
3
4
5
Section A—Losses From Straddles
(a) Description of property
(b) Date
entered
into or
acquired
(c) Date
closed out
or sold
(d) Gross
sales price
(e) Cost or
other basis
plus
expense of
sale
(f) Loss.
If column (e)
is more than
(d), enter
difference.
Otherwise,
enter -0­
(g)
Unrecognized
gain on
offsetting
positions
(h) Recognized
loss. If column (f)
is more than (g),
enter difference.
Otherwise, enter
-0­
*(i) 28% rate
loss (see instr.
below)
10
11a Enter the short-term portion of losses from line 10, column (h), here and include
on the appropriate line of Schedule D (see instructions)
b Enter the long-term portion of losses from line 10, columns (h) and (i), here and
include on the appropriate line of Schedule D (see instructions)
11a (
)
11b (
) (
)
Section B—Gains From Straddles
(a) Description of property
(b) Date
entered
into or
acquired
(c) Date
closed out
or sold
(d) Gross sales price
(f) Gain. If column (d) is
more than (e), enter
difference. Otherwise,
enter -0­
(e) Cost or other
basis plus expense of
sale
*(g) 28% rate gain
(see instr. below)
12
13a Enter the short-term portion of gains from line 12, column (f), here and
include on the appropriate line of Schedule D (see instructions)
b Enter the long-term portion of gains from line 12, columns (f) and (g), here
and include on the appropriate line of Schedule D (see instructions)
Part III
13a
13b
Unrecognized Gains From Positions Held on Last Day of Tax Year. Memo Entry Only (see instructions)
(a) Description of property
(b) Date
acquired
(c) Fair market value on last
business day of tax year
(d) Cost or other basis
as adjusted
(e) Unrecognized gain.
If column (c) is more
than (d), enter difference.
Otherwise, enter -0­
14
*28% rate gain or loss includes all “collectibles gains and losses” and up to 50% of the eligible gain on qualified small business stock. See Instructions for Schedule D (Form 1040).
For Paperwork Reduction Act Notice, see page 3.
Cat. No. 13715G
Form
6781
(2002)
Form 6781 (2002)
General Instructions
Section references are to the Internal
Revenue Code unless otherwise noted.
Purpose of Form
Use Form 6781 to report:
● Any gain or loss on section 1256 contracts
under the mark-to-market rules and
● Gains and losses under section 1092 from
straddle positions.
For details on section 1256 contracts and
straddles, see Pub. 550, Investment Income
and Expenses.
Section 1256 Contract
A
●
●
●
●
●
section 1256 contract is any:
Regulated futures contract,
Foreign currency contract,
Nonequity option,
Dealer equity option, or
Dealer securities futures contract.
For definitions of these terms and more
details, see section 1256(g) and Pub. 550.
Special rules apply to certain foreign
currency contracts. See section 988 and
Regulations sections 1.988-1(a)(7) and
1.988-3. If an election is made under section
988(a)(1)(B) or 988(c)(1)(D), attach to your
return a list of the contracts covered by the
election(s), showing the net gain or loss
reported from those contracts and identifying
where the gain or loss is reported on the
return. If an election is made under section
988(a)(1)(B), report on Form 6781 the gains
and losses from section 1256 contracts that
are also section 988 transactions.
Options and commodities dealers must
take any gain or loss from the trading of
section 1256 contracts into account in
figuring net earnings subject to
self-employment tax. See section 1402(i).
Mark-To-Market Rules
Under these rules, each section 1256
contract held at year end is treated as if it
were sold at fair market value (FMV) on the
last business day of the tax year. The
wash-sale rules do not apply.
Straddle
A straddle means offsetting positions with
respect to personal property of a type that is
actively traded.
Offsetting Positions
If there is a substantial decrease in risk of
loss to a taxpayer holding a position because
that taxpayer or a related party also holds
one or more other positions, then those
positions are offsetting and may be part of a
straddle. However, if an identified straddle is
properly established, other positions held by
the taxpayer will not be treated as offsetting
with respect to any position which is part of
the identified straddle.
Page
2
Box A. Mixed Straddle
Election
Box D. Net Section 1256
Contracts Loss Election
Under section 1256(d), you may elect to have
the mark-to-market rules not apply to section
1256 contracts that are part of a mixed
straddle. A mixed straddle is any straddle in
which at least one but not all of the positions
is a section 1256 contract. On the day the
first section 1256 contract forming part of the
straddle is acquired, each position forming
part of the straddle must be clearly identified
as being part of such straddle. If you make
this election, it will apply for all later years
and cannot be revoked without IRS consent.
If you are making or have previously made
this election, check box A and report the
section 1256 component in Part II instead of
Part I.
If you have a net section 1256 contracts loss
for 2002, you may elect to carry it back 3
years. Corporations, partnerships, estates,
and trusts are not eligible to make this
election. Your net section 1256 contracts
loss is the smaller of:
● The excess of your losses from section
1256 contracts over the total of (a) your gains
from section 1256 contracts plus (b) $3,000
($1,500 if married filing separately) or
● The total you would figure as your
short-term and long-term capital loss
carryovers to 2003 if line 6 of Form 6781
were zero. Use a separate Schedule D (Form
1040) and Capital Loss Carryover
Worksheet (on page D-6 of the Schedule D
instructions) to figure this amount.
The amount you may carry back to any
prior year is limited to the smaller of:
● The gain, if any, that you would report on
line 17 of Schedule D for that carryback year
if only gains and lossess from section 1256
contracts were taken into account or
● The gain, if any, reported on line 17 of
Schedule D for that carryback year.
The above amounts are figured prior to any
carryback from the loss year. Also, the
carryback is allowed only to the extent it
does not increase or produce a net operating
loss for the carryback year. The loss is
carried to the earliest year first.
Make the election by checking box D and
entering the amount to be carried back on
line 6. To carry your loss back, file Form
1045, Application for Tentative Refund, or an
amended return. Attach an amended Form
6781 and an amended Schedule D for the
applicable years.
Box B. Straddle-By-Straddle
Identification Election
Make this election for mixed straddles
according to Temporary Regulations section
1.1092(b)-3T(d) by clearly identifying each
position by the earlier of (a) the close of the
day the identified mixed straddle is
established or (b) the time the position is
disposed of. No straddle-by-straddle
identification election may be made for any
straddle for which a mixed straddle election
was made or if one or more positions are
includible in a mixed straddle account. If you
are making or have previously made this
election, check box B.
If the net gain or loss is attributable to a
net non-section 1256 position, then the net
gain or loss is treated as a short-term capital
gain or loss. Enter it directly on Schedule D
and identify the election. If the net gain or
loss is attributable to a section 1256 position,
enter the gain or loss in Part I of Form 6781
and identify the election.
Box C. Mixed Straddle
Account Election
Make this election according to Temporary
Regulations section 1.1092(b)-4T(f) to
establish one or more mixed straddle
accounts for 2003, by the due date (without
extensions) of your 2002 tax return. To make
this election, check box C and attach to your
return the statement required by the
regulations. Report the annual account net
gain or loss from a mixed straddle account in
Part II and identify the election. See
Temporary Regulations section
1.1092(b)-4T(c)(4) for limits on the total annual
account net gain or loss.
Note: If you did not make any of the above
elections and you have a loss on the section
1256 component, use Part II to reduce the
loss by any unrecognized gain on the
non-section 1256 component before making
an entry in Part I. You also must reduce the
loss from any section 1256 component of a
straddle that would be a mixed straddle if the
positions had been properly identified as
such.
On the amended Forms 6781 for the years
to which the loss is carried back, report the
carryback on line 1 of that year’s amended
Form 6781. Enter “Net section 1256 contracts
loss carried back from” and the tax year in
column (a), and enter the amount of the loss
carried back in column (b).
Specific Instructions
Part I
Line 1
Include on line 1 all gains and losses from
section 1256 contracts open at the end of
your tax year or closed out during the year. If
you received a Form 1099-B, Proceeds From
Broker and Barter Exchange Transactions, or
equivalent statement, include on line 1 the
amount from box 9 of each form. In column
(a), write “Form 1099-B” and the broker’s
name. List separately each transaction for
which you did not receive a Form 1099-B or
equivalent statement, or received a Form
1099-B that is not for your tax year.
Form 6781 (2002)
If you are completing an amended 2002
Form 6781 to carry back a net section 1256
contracts loss from 2003 or a later year,
report the carryback on line 1. Enter “Net
section 1256 contracts loss carried back
from” and the tax year in column (a), and
enter the amount of the loss carried back to
2002 in column (b). See the instructions for
Box D for details.
Line 4
If the Form 1099-B you received includes a
straddle or hedging transaction (as defined in
section 1256(e)(2)), you may need to make
certain adjustments listed below. Attach a
schedule listing each of these adjustments
and enter the total on line 4.
● The regulated futures part of a mixed
straddle, if you made any of the mixed
straddle elections.
● The amount of the loss, if you did not make
any of the mixed straddle elections or the
straddle was not identified as a mixed
straddle and you had a loss on the regulated
futures part that was less than the
unrecognized gain on the nonregulated
futures part. If the unrecognized gain is less
than the loss, enter the unrecognized gain.
Use Part I for a loss on the disposition of one
or more positions that are part of a mixed
straddle and that are non-section 1256
positions if no disposition of a non-section
1256 position in the straddle would be a
long-term capital gain or loss, and the
disposition of one or more section 1256
positions in the straddle would be a capital
gain or loss.
● The regulated futures part of a hedging
transaction. The gain or loss on a hedging
transaction is treated as ordinary income or
loss. See Pub. 550 for details.
Line 5
Partnerships enter the amount from line 5 on
Form 1065, Schedule K, line 7. Electing large
partnerships enter the amount from line 5 on
Form 1065-B, Part II, line 5. S corporations
enter the amount from line 5 on Form 1120S,
Schedule K, line 6. Lines 6 through 9 in Part I
do not apply to partnerships or S
corporations and are left blank.
Page
to the extent it exceeds the unrecognized
gain on offsetting positions. The part of the
loss not allowed is treated as if incurred in
the following year and is allowed to the same
extent.
Use Section B for gains from positions that
are part of a straddle.
Do not include in Part II a disposition of
one or more positions that are part of a
hedging transaction, a disposition of a loss
position included in an identified straddle, or
a disposition of a position that is part of a
straddle if all the positions of the straddle are
section 1256 contracts.
Column (a)
Enter the property and delivery date, and
indicate whether the property is a long or
short position.
Column (d)
For positions closed out or sold, enter the
closing price or sales price.
Column (e)
For positions closed out or sold, enter the
cost or other basis plus commissions paid.
Include nondeductible interest and carrying
charges allocable to personal property that is
part of a straddle. See Pub. 550 for details.
Line 10, Column (f)
Include in this column any loss not allowed in
the prior year to the extent of the
unrecognized gain.
Enter the unrecognized gain on positions
offsetting those in columns (a) through (f).
Figure the amount to enter in this column by
subtracting the cost or other basis of the
offsetting position from the settlement price
of that position as of the close of the last
business day of your 2002 tax year.
Line 10, Column (i) and Line 12,
Column (g)
Enter in these columns the gain or (loss) for
28% rate transactions.
Lines 11 and 13
See the instructions for Box D.
Separate recognized gains and losses into
short-term and long-term. Attach a separate
schedule. For information about holding
periods for straddle positions, see Pub. 550
and Temporary Regulations section
1.1092(b)-2T. Attach separate schedules for
(a) section 988 contracts that are part of a
mixed straddle and (b) any gain on the
disposition or other termination of any
position held as part of a conversion
transaction (as defined in section 1258(c)).
Identify the net gain or loss and report it on
Form 4797, line 10.
Include the line 11a amount on Schedule D
(Form 1040), line 4; Schedule D (Form 1041),
line 2; or as a short-term capital loss on the
Schedule D for your return, and enter “Form
6781, Part II” in column (a) of that
Schedule D.
Include the line 11b, columns (h) and (i)
amounts on Schedule D (Form 1040), line 11,
columns (f) and (g); Schedule D (Form 1041),
Include this amount on Schedule D (Form
1040), line 4; Schedule D (Form 1041), line 2;
or enter the amount as a short-term capital
gain or (loss) on the Schedule D for your
return, and enter “Form 6781, Part I” in
column (a) of that Schedule D.
Line 9
Include this amount on Schedule D (Form
1040), line 11, column (f); Schedule D (Form
1041), line 7, column (f); or as a long-term
capital gain or (loss) on the Schedule D for
your return, and enter “Form 6781, Part I” in
column (a) of that Schedule D.
Part II
Use Section A for losses from positions that
are part of a straddle. A loss is allowed only
line 7, columns (f) and (g); or only the column
(h) amount as a long-term capital loss on the
Schedule D for your return, and enter “Form
6781, Part II” in column (a) of that
Schedule D.
Include the line 13a amount on Schedule D
(Form 1040), line 4; Schedule D (Form 1041),
line 2; or as a short-term capital gain on the
Schedule D for your return, and enter “Form
6781, Part II” in column (a) of that
Schedule D.
Include the line 13b, columns (f) and (g),
amounts on Schedule D (Form 1040), line 11,
columns (f) and (g); Schedule D (Form 1041),
line 7, columns (f) and (g); or only the column
(f) amount as a long-term capital gain on the
Schedule D for your return, and enter “Form
6781, Part II” in column (a) of that
Schedule D.
Part III
Complete Part III by listing each position
(whether or not part of a straddle) that you
held at the end of the tax year (including any
position you are treated as holding because it
is held by a related party) if the FMV of the
position at such time exceeds your cost or
other basis as adjusted.
Do not include positions that are part of an
identified straddle or hedging transaction,
property that is stock in trade or inventory, or
property subject to depreciation used in a
trade or business.
Do not complete Part III if you do not have
a recognized loss on any position (including
regulated futures contracts).
Line 10, Column (g)
Line 6
Line 8
3
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